46 U.S.C. § 55102; 19 C.F.R. § 4.80b(a); Storage of oil on a foreign-flagged vessel within U.S. territorial waters; HQ 116007 (July 25, 2003)

HQ H024374 March 13, 2008 VES-3-24-OT:RR:BSTC:CCI H024374 LLB CATEGORY: Carriers Captain Ralph G. Rohena, Jr. Conoco Phillips Commercial Marine 600 N. Dairy Ashford, Suite HU 3056B Houston, Texas 77079 Re: 46 U.S.C. § 55102; 19 C.F.R. § 4.80b(a); Storage of oil on a foreign-flagged vessel within U.S. territorial waters; HQ 116007 (July 25, 2003) Dear Captain Rohena: This is in response to your letter dated March 7, 2008, supplemented by your electronic mail of March 10, 2008, in which you request a ruling on the applicability of 46 U.S.C. § 55102 to the use of a foreign-flagged vessel to store oil. Our decision follows. FACTS Conoco Phillips (Conoco) intends to charter a foreign-flagged storage vessel to load a cargo of oil from its shore tanks at its Alliance Refinery in Belle Chasse, Louisiana. Conoco will shift the loaded vessel, for a period of about two weeks, to a lay berth on the Mississippi River or to an anchorage outside the mouth of the Mississippi River, which is approximately 62 miles from the refinery. At the end of the two-week period, the storage vessel will reberth at the original loading point at the Alliance Refinery in Belle Chasse and return the full cargo to its shore tanks. ISSUE Whether the use of the foreign-built vessel to store oil as described in the FACTS section above is an engagement in the coastwise trade in violation of 46 U.S.C. § 55102. LAW AND ANALYSIS The coastwise laws generally apply to points in the territorial sea, which is defined as the belt, three nautical miles wide, seaward of the territorial sea baseline, and to points located in internal waters, landward of the territorial sea baseline. See 33 C.F.R. § 2.22(a)(2)(2008). The coastwise law pertaining to the transportation of merchandise, 46 U.S.C. § 55102,1 also known as the "Jones Act", provides in pertinent part, that the transportation of merchandise between points in the United States embraced within the coastwise laws, either directly or via a foreign port, or for any part of the transportation, in any vessel other than a vessel built in and documented under the laws of the United States and owned by persons who are citizens of the United States, i.e. a coastwise-qualified vessel, is prohibited. The CBP Regulations promulgated under the authority of 46 U.S.C. § 55102 provide that a coastwise transportation of merchandise takes place when merchandise laden at a point embraced within the coastwise laws ("coastwise point") is unladen at another coastwise point, regardless of origin or ultimate destination. See 19 C.F.R. § 4.80b(a)(2008). In HQ 116007 (July 25, 2003), the ruling requester proposed loading butane onto a foreign-flagged storage vessel from its shore tanks at its refinery and then shifting to a lay berth or anchorage. Once the storage contract expired, the storage vessel would return to its original loading point at the same refinery and return the full cargo of butane to the shore tanks. CBP held that the use of the foreign-flagged storage vessel would not be an engagement in coastwise trade since the cargo was loaded and unloaded at the same coastwise point. Similarly, in the present case, oil will be loaded onto a foreign-flagged storage vessel at the Alliance Refinery in Belle Chasse, Louisiana, shifted to a lay berth or anchorage, and then be returned to the Alliance Refinery in Belle Chasse, Louisiana. Such use of a foreign-flagged storage vessel would not be in violation of 46 U.S.C. § 55102. HOLDING The use of the foreign-built vessel to store oil described above would not be an engagement in coastwise trade in violation of 46 U.S.C. § 55102. Sincerely, Glen E. Vereb, Chief Cargo Security, Carriers and Immigration Branch 1 Formerly 46 U.S.C. App. § 883. Recodified by Pub. L. 109-304 (Oct. 6, 2006).